What Are Differences Between Manual & Computerized …

What Are Differences Between Manual & Computerized Accounting?

Manual accounting requires that all journal entries, invoices and other financial documents be created by hand. Computerized accounting allows users to input information into accounting software programs.

? Speed

Computerized accounting produces information much faster than manual accounting. Accounting software packages, such as QuickBooks and Peachtree, come with built-in databases that allow users to input data.

? Accuracy

Manual accounting systems are prone to mathematical errors and misplaced numbers. With a computerized accounting system, your company data is automatically calculated based on numbers you input.

? Financial Statements

In a manual accounting system, you have to prepare your company's income statement, balance sheet and statement of owner's equity by hand. Information from your journal entries helps formulate your company's financial statements. Computerized accounting systems allow financial statements to be created from information stored in the database.

? Cost

The cost of computerized accounting systems can range from hundreds to thousands of dollars for large businesses. A computerized accounting system may save on man hours used for creating financial statements and other reports. For this reason, many small and mid-sized businesses use computerized accounting software.

? Reports

Reports are created in a timely manner when using a computerized accounting system. Reports generated from computerized accounting software allow managers to run the company in a more efficient manner. Creating reports in a manual accounting system may lead to more staff frustration and result in having to work with outdated information.

? Safety

Accounting records kept on the manual system can be lost or damaged easily, such as by coffee spills. On the other hand, records kept by a computer are likely to be safer because many systems are backed up often. If you lose pages in a paper pad, you may have to recreate the transactions by conducting research and writing them in again. In a computerized system, you simply restore the latest backup and add a few transactions that were not saved. In this area, accounting software is obviously superior to manual systems.

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